Why Aren't More Employees Suing Uber?

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Why Aren't More Employees Suing Uber?

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When Uber cofounder Travis Kalanick announced his resignation as CEO on Tuesday, many of those who pushed for his ouster after years of management scandals credited Susan Fowler. In February, the former Uber engineer published a blog post outlining the sexual harassment, retaliation, and gender discrimination she claims to have experienced there. Uber promptly hired former US attorney general Eric Holder to investigate. On June 13, Uber released Holder's recommendations for fixing the company’s noxious culture, and his suggestions included a diminished role for Kalanick. The embattled CEO took a leave of absence later that day; he resigned one week later amid pressure from investors.

While it’s easy to trace the tremendous impact Fowler had on the $70 billion transportation juggernaut, Fowler—like other current and former Uber employees—probably won't see her day in court. Uber’s employment contract required signing a binding arbitration agreement stipulating that cases be settled privately by an arbiter instead of a jury. (The company says employees now have 30 days to opt out but did not say when it started allowing them to do so.) The arbitration agreement, like many others, also curbs class-action lawsuits by requiring employees to arbitrate disputes individually, although they can opt out of this too. (Uber requires drivers and riders to also sign arbitration agreements, but the language varies.)

One current engineer told WIRED that Uber’s arbitration agreement has kept at least two people from suing the company for sexual harassment and gender discrimination. Although signing the agreement does not preclude employees from filing suit, the engineer believes that Uber recognizes the chilling effect of mandatory arbitration. “When all of this went down, Uber was smart," the engineer says. "They hired Holder, and this made me realize that no other engineer would be seeking legal action against Uber, either. Who would want to go against the ex-attorney general of the US?"

Uber says it retained Holder to lead the investigation, not to defend the company. It also fired twenty people after a separate internal investigation. “We have taken strong actions to address claims of harassment, discrimination, and other inappropriate behavior and have established processes and systems to ensure the mistakes of the past will not be repeated," the company said in a statement. "We're focused on rebuilding trust with our employees and the communities we serve, and building a company and culture that we can be proud of."

Such agreements are especially prevalent in the tech sector, says Larry Organ, an employment lawyer representing a client suing Tesla for racial discrimination. Although an arbitration agreement can allow for mediation, settlements, and punitive damages, it “tends to reduce damages awarded very significantly, and it’s private,” Organ says. Arbitration also limits discovery and appellate rights. Last month, a federal judge denied Uber’s motion to compel arbitration in the trade-secrets lawsuit filed by Waymo, Alphabet’s autonomous-vehicle company. Waymo called Uber’s motion “a desperate bid to avoid the court’s jurisdiction.” Still, the courts tend to enforce arbitration in typical employment disputes.

Like some other employers, Uber’s arbitration agreement includes a waiver if employees want to file their complaint with an agency like the Equal Employment Opportunity Commission. Employers don't worry much about this because government agencies have such a heavy workload, says Ramsey Hanafi, a partner at Quintana Hanaf who is representing a client with a pending lawsuit against WeWork.

Hanafi notes that California offers some of the nation's strictest worker protections, but “then we run into the problem of arbitration, which kind of takes that completely out of the equation." Companies “routinely insist on these clauses, but they see it as a scare tactic."

California law required that Uber investigate Fowler’s claims as soon as she raised them. Based on the timeline in her blog post, she made her first claim of sexual harassment to Uber's human resources department two weeks after joining the company in November 2015. The next spring, Uber fired the manager in question after her complaints; Holder launched his inquiry in February 2017.

Such delays are not unusual. Before Ellen Pao filed her gender discrimination lawsuit against Kleiner Perkins Caufield & Byers, the venture capital firm where she worked, the company investigated her claims of discrimination and retaliation in 2012. That was five years after she first raised the issue. Hanafi says that the rigor of the investigations varies and can often be “done in a pro forma fashion.”

Hanafi believes that Uber's decision to hire Holder and publish his recommendations—and the "self-induced public flogging" that followed his report—was a PR move more than an anticipation of legal trouble.

One of the most significant business cases that the Supreme Court will hear during its next term, National Labor Relations Board v. Murphy Oil USA, argues that arbitration clauses prevent employees from bringing class actions. On June 16, the Department of Justice suddenly abandoned its support for workers in a case that cites a New York Timesinvestigation into arbitration as a means of privatizing the justice system.

“Part of the problem nowadays is that you’re waiving your constitutional civil rights,” says Organ, who believes arbitration agreements strongly dissuades employees from suing. “They see the system as rigged in favor of the company, as it is.”

Fowler made many of those points in "Five Things Tech Companies Can Do Better," a blog post she wrote in May. Her first suggestion? Ending forced arbitration, because it “deprives employees of their constitutional rights, and it forces employees who have been treated unlawfully to keep silent about what they have experienced. It is entirely in the interests of the company and not the employee.”

Fowler declined to comment for this article, but when Uber released Holder’s report, she called Uber’s response a matter of optics. “Remember that this is not about diversity and inclusion, it's about laws being broken. Harassment, discrimination, retaliation are illegal,” she wrote on Twitter, before posting links to legal sources showing that sexual harassment, discrimination, and retaliation violate various state and federal laws.

Organ calls arbitration a poor method of resolving such disputes. Civil rights protections and antidiscrimination laws were designed “to change public attitudes, case by case,” he says. Skilled lawyers used those laws to attack the idea of “separate but equal," which led to the overturning of such laws in cases like Brown v. Board of Education of Topeka. “If you don’t have this public case, there’s no change,” Organ says. “How do you make people understand that sexual harassment is unacceptable if there’s no public scrutiny?”

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